What’s the deal with deal-hunting?

Bargain shopping has become, quite literally, part of the retail landscape. Over the last decade, retailers like Dollar General, Family Dollar, Ross and TJX have multiplied to cities and neighborhoods across the United States. In some states like Texas, their locations now number in the thousands. While some of this was spurred by the Great Recession and the needs of cash-strapped consumers, value-oriented retailers continue to capture shoppers’ attention eight years into the economic recovery. In fact, the latest NRF Consumer View found that nine in 10 (89%) consumers say they shop at bargain retailers like discount grocery, thrift, dollar and off-price stores.

Regardless of the sector a retailer or brand operates in, chances are high that their customers also shop at dollar stores, discount grocers, outlets or off-price stores. This shapes their expectations when it comes to how and when they can find a deal. As the holiday season approaches, NRF’s research team identified three trends to pay attention to when appealing to consumers’ value-oriented mindset.

It’s popular with younger consumers

Off-price and discount’s focus on physical, store-driven retail has not discouraged younger shoppers. Millennials represent nearly a third of bargain and discount shoppers, and the majority of these say they shop at locations like dollar, discount grocery and off-price stores even more than they did five years ago. Many of these consumers came of age during the recession, and off-price and discount shopping allowed them to buy name-brand and quality goods that met their limited budgets. Shopping deals may no longer be a necessity for many millennials, but they continue to turn to value-oriented retailers to purchase everything from clothing and groceries to home and beauty items.

And it looks like Gen Z, the first generation of digital natives, is following in their footsteps. Among members of Generation Z aged 18 to 23, 93 percent say they are shopping discount and bargain retail. However, while many bargain retailers have yet to enter the ecommerce world, they are connecting with younger generations on mobile. Family Dollar recently launched a mobile loyalty app that gamifies rewards and engages shoppers outside of the store. Similarly, TJX banner HomeGoods uses its app to connect consumers with their local store, keep up on new arrivals and save favorites.

It’s about saving a buck, even if consumers don’t have to

Consumers want to find deals regardless of their economic circumstances. In fact, 90 percent of households with an income of $100,000 or more say they shop at bargain retailers. For these households, it is not just about the satisfaction of getting a “steal” on an item they want. It’s also about the opportunity to discover new brands or products or to find something unique.

Discounters like Trader Joe’s successfully foster this spirit of exploration. Trader Joe’s famously eschews most marketing channels, investing instead in things like in-store sampling, which allows shoppers to try everything from new snack items to frozen dinners. Similarly, footwear discounter DSW uses an open-sell format to encourage customers to interact directly with products and explore new brands. However, more affluent households also have higher expectations when it comes to their shopping experience: Nearly half expect discount retailers to offer free shipping, compared with a third of discount shoppers overall.  

Shoppers are happy to sacrifice convenience, for now

In general, consumers accept that getting a great price means they might have to sacrifice on convenience, service and even choice in how or what they buy. Only 28 percent of discount shoppers expect to be able to shop online at a bargain retailer like a dollar or off-price store, and just 22 percent expect things like product reviews that are standard at many full-price stores.

In today’s rapidly evolving retail environment, it is increasingly difficult just to compete on price. With tools like lightening deals and sale events like Prime Day and Black Friday, full-price retailers can grab shoppers’ attention with highly targeted deals and promotions while also providing a different level of service and convenience. Consumers know they have options: Even discount shoppers say they will check prices at another retailer or brand before making a purchase at a bargain store. And the bargain landscape is evolving to meet consumers’ needs — retailers like Hollar and Brandless combine the convenience of ecommerce with dollar store prices.

To learn more about consumers’ attitudes when it comes to finding value and how this is shaping their shopping experience and expectations, check out the latest edition of the Consumer View.

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